CRITEO S.A. ITEM 2.02 Results of Operations and Financial Condition
As previously reported in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , inNovember 2018 ,Privacy International filed a complaint with certain data protection authorities, includingFrance's Commission Nationale de l'Informatique et des Libertés ("CNIL"), againstCriteo and a number of other similarly situated advertising technology companies, arguing that certain of these companies' practices were not in compliance with theEuropean Union's General Data Protection Regulation ("GDPR"). InJanuary 2020 , CNIL opened a formal investigation intoCriteo in response to this complaint, and onJune 23, 2021 CNIL notified the Company of the appointment of an investigator ("rapporteur") for the ongoing investigation. The investigation also covers another complaint against the Company received inNovember 2018 by CNIL from theEuropean Center for Digital Rights ("NOYB"). OnAugust 3, 2022 , the assigned rapporteur issued a report that claimed certain GDPR violations, in particular relating to the Company's contractual relationships with its advertisers and publishers with respect to consent collection oversight. The report includes a proposed financial sanction against the Company of €60.0 million ($65.4 million ). Under the CNIL sanction procedures,Criteo has the right to respond in writing to the report, both with respect to the GDPR findings and the value of the sanction, following which there will be a formal hearing before the CNIL Sanction Committee. The CNIL Sanction Committee will then issue a draft decision that will be submitted for consultation to other European data protection authorities as part of the cooperation mechanism mandated by GDPR. Any final decision on resolution and potential financial penalties would likely not occur until 2023. Pursuant toU.S. generally accepted accounting principles ("GAAP"), the Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated, and these accruals are reviewed and adjusted each quarter based on the information available at that time. Given the receipt of this report, which included a proposed sanction penalty of €60.0 million ($65.4 million ), we have accounted for the proposed penalty as a provision for loss contingency, which is reflected in our financial statements for the period ended as ofJune 30, 2022 as general and administrative expenses. Such amount could be lower or higher based on the final resolution and merits of the claims made in the report. The Company has revised its financial statements and other disclosures contained in the Press Release to reflect the establishment of the accrual. These revisions affected the Company's net income, earnings per share, and liabilities, for the three and six months endedJune 30, 2022 . The Company's non-GAAP results for the three and six months endedJune 30, 2022 remain unchanged. Amended financial statements giving effect to the accrual are reflected herein and replace those included in the Press Release. These revisions have no effect on the Company's previously issued guidance for the third quarter 2022 or the fiscal year 2022. The information furnished with this Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
This Form 8-K/A contains references to non-GAAP financial information. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is included below. The reconciliations included below supersede the non-GAAP reconciliations included in the Press Release.
--------------------------------------------------------------------------------
Summary of Changes
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2022
Revised Original Change Revised Original Change
(in millions, except EPS data)
GAAP Results
Revenue $ 495 $ 495 - % $ 1,006 $ 1,006 - %
Gross Profit $ 185 $ 185 - % $ 369 $ 369 - %
Net Income (loss) $ (33) $ 18 $ (51) $ (12) $ 39 $ (51)
Gross Profit margin 37 % 37 % - % 37 % 37 % - %
Diluted EPS $ (0.54) $ 0.27 $
(0.81)
- %$ 89 $ 89 - % Cash and cash equivalents$ 563 $ 563 - %$ 563 $ 563 - % Non-GAAP Results1 Contribution ex-TAC$ 215 $ 215 - %$ 431 $ 431 - % Contribution ex-TAC margin 43 % 43 % - % 43 % 43 % - % Adjusted EBITDA$ 50 $ 50 - %$ 113 $ 113 - % Adjusted diluted EPS$ 0.37 $ 0.58 $ (0.21) $ 0.90 $ 1.11 $ (0.21) Free Cash Flow (FCF)$ (1) $ (1) - %$ 68 $ 68 - % FCF / Adjusted EBITDA (3) % (3) % - % 60 % 60 % - %
___________________________________________________
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures
calculated in accordance with
--------------------------------------------------------------------------------
CRITEO S.A. Consolidated Statement of Financial Position (U.S. dollars in thousands, unaudited)June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $
562,546 $ 515,527
Trade receivables, net of allowances of
490,643 581,988 respectively Income taxes 19,888 8,784 Other taxes 68,608 73,388 Other current assets 39,240 34,182 Marketable securities - current portion 10,000 50,299 Total current assets 1,190,925 1,264,168 Property, plant and equipment, net 124,133 139,961 Intangible assets, net 78,018 82,627 Goodwill 322,972 329,699 Right of Use Asset - operating lease 108,563 120,257 Marketable securities - non current portion - 5,000 Non-current financial assets 4,908 6,436 Deferred tax assets 41,325 35,443 Total non-current assets 679,919 719,423 Total assets$ 1,870,844 $ 1,983,591 Liabilities and shareholders' equity Current liabilities: Trade payables$ 400,058 $ 430,245 Contingencies 64,731 3,059 Income taxes 3,791 6,641 Financial liabilities - current portion 255 642 Lease liability - operating - current portion 32,110 34,066 Other taxes 50,589 60,236 Employee - related payables 70,435 98,136 Other current liabilities 44,390 39,523 Total current liabilities 666,359 672,548 Deferred tax liabilities 2,907 3,053 Defined benefit plans 3,213 5,531 Financial liabilities - non current portion 334 360 Lease liability - operating - non current portion 82,984 93,893 Other non-current liabilities 4,859 9,886 Total non-current liabilities 94,297 112,723 Total liabilities 760,656 785,271 Commitments and contingencies Shareholders' equity: Common shares, €0.025 par value, 65,794,032 and 65,883,347 shares authorized, issued and outstanding at June 30, 2022 2,147 2,149 andDecember 31, 2021 , respectively. Treasury stock, 5,265,393 and 5,207,873 shares at cost as (148,509) (131,560)
of
750,774 731,248
Accumulated other comprehensive income (loss) (102,931) (40,294)
Retained earnings 577,552 601,588
Equity - attributable to shareholders of Criteo S.A. 1,079,033 1,163,131
Non-controlling interests 31,155 35,189
Total equity 1,110,188 1,198,320
Total equity and liabilities $ 1,870,844 $ 1,983,591 --------------------------------------------------------------------------------
© Edgar Online, source
